Policy

ES-CON ASSET MANAGEMENT Ltd. (hereinafter, the “Company”) has established the following policy, to carry out business conduct oriented to ESCON JAPAN REIT Investment Corporation (hereinafter, the “ESCON REIT”) from which the Company is entrusted with business pertaining to asset management and its investors (the “Investors”) (ESCON REIT and the Investors are collectively referred to as the “Customers”), in response to the Principles for Customer-Oriented Business Operation (including subsequent revisions, hereinafter, the “Principles”) published by the Financial Services Agency on March 30, 2017.
Based on this policy, the Company will aim to provide high quality services to its Customers, contribute to the development of the economy and society, and broadly establish trust from Customers and society.
The Company has only been entrusted with asset management for the ESCON REIT, therefore, the Company does not offer or recommend any financial instruments and services for which clarification of response policy is required in the Principle 3(Note), Principle 5(Note 1) (Note 2) (Note 4), and Principle 6(Note 1) (Note 2) (Note 3) (Note 4).

1. Formulation and announcement of policy for customer-oriented business operations, etc.

The Company formulates and announces a clear policy for achieving customer-oriented business operations, and regularly announces the status of efforts related to this policy. In addition, the Company will periodically review this policy in order to achieve better business operations.

2. Pursuing the optimal profit for Customers

The Company maintains a high level of expertise and professional ethics and conducts business in good faith and fairness to its Customers, striving to serve their best interests. In addition, the Company endeavors to establish such business operations as an integral part of its corporate culture.

3. Appropriate management of conflicts of interests

In regard to conflicts of interests in dealings with stakeholders, the Company accurately understands when there is such a possibility, and in such a case, in order to properly secure the interests of its Customers through strictly applying transparent decision-making rules in accordance with laws, regulations, and internal rules, the Company appropriately manages such conflicts of interests.

4. Clarification of fees, etc.

The Company provides information that enables Customers to understand the details of the fees and other expenses they pay to the Company, including the types of services they are paying for.

5. Provision of important information in a way that is easy to understand

The Company performs appropriate statutory and timely disclosure, from the perspective of the Investors, of important information including descriptions of risks associated with investment in the ESCON REIT. In addition, the Company will provide information that is considered useful for investment decisions on ESCON REIT’s website and in other media as voluntary disclosure in an accurate and easy-to-understand manner.

6. Providing services suitable for Customers

The Company aims to achieve sustainable growth and stable investment management that contributes to the medium- and long-term profits of its Customers by deepening mutual understanding of its investment policy and the needs of its Customers through careful and constructive dialogue with them, and by flexibly improving its investment management as necessary. In addition, the Company will strive to provide appropriate information so that different and unspecified investors can invest in ESCON REIT with peace of mind and conviction.

7. Framework for appropriate employee incentives, etc.

In order to realize customer-oriented business operations, the Company believes it is important for all of its officers and employees to have a high level of professionalism and a high sense of professional ethics, and will establish a governance system and a framework for training and other appropriate motivation for all officers and employees.

Initiatives

1. Formulation and announcement of policy for customer-oriented business operations, etc.

In order to realize customer-oriented business operations, the Company has established the "Customer-Oriented Business Operation Policy", the "Management Principles" and the "Declaration of Compliance".

2. Pursuing the optimal profit for Customers

The Company will strive to achieve external growth by expanding the asset size and internal growth by increasing the value of ESCON REIT’s assets, as well as sound and stable financial management. In addition, the Company aims to maximize unitholder’s value through enhancing the price stability and liquidity of investment units by increasing the scale of assets and growing distributions.

3. Appropriate management of conflicts of interests

The Company recognizes the importance of the appropriate management of conflicts of interests between the ESCON REIT and ES-CON JAPAN Ltd., which is the sponsor of the ESCON REIT, and other interested parties of the Company in connection with asset management business that the Company carries out for the ESCON REIT and establishes internal rules, which include “Interested-Party Transaction Rules”, etc., to manage such conflicts of interests. The company strictly follows the rules for transparent decision-making under such internal rules^*1 and discloses the status of interested-party transactions in the press releases, disclosure documents, etc. of the ESCON REIT appropriately and in a timely manner.

*1 Ex. Decision-making process for property acquisitions by ESCON REIT (Interested-Party Transaction)

• ESCON REIT has not published an English version of reports related to the management system, etc. and Securities Report.

4. Clarification of fees, etc.

The fees, the Company receives from the ESCON REIT, are stipulated in the ESCON REIT's Articles of Incorporation as "Management Fee I" linked to total assets, "Management Fee II" linked to income before income taxes, "Acquisition Fee" in the case of acquisition of real estate-related assets, and "Disposition Fee" in the case of disposition of real estate-related assets.

• ESCON REIT has not published an English version of articles of incorporation and Asset Management Reports.

5. Provision of important information in a way that is easy to understand

With regard to information disclosure, in addition to disclosing information in accordance with laws and regulations, the Company strives to post information deemed necessary and appropriate for unitholders to make investment decisions in a timely and easy-to-understand manner on the ESCON REIT's website. Furthermore, the Company holds a briefing session for institutional investors and analysts each fiscal period of the ESCON REIT, and the content of the briefing session is posted on the above website along with the presentation materials and a video of the session.

6. Providing services suitable for Customers

In managing the assets of the ESCON REIT, the Company aims to secure long-term stable earnings and maximize unitholder’s value through investment in lifestyle-focused assets by understanding the information and needs of the Customers through dialogue with them through IR activities, and actively and carefully disclose information through ESCON REIT’s website so that all Customers can easily understand the strategies and management status of the ESCON REIT.

• ESCON REIT has not published an English version of Video of the session and Event Participation Schedule and Achievement Information.

7. Framework for appropriate employee incentives, etc.

The Company has formulated its "Management Principles" and "Declaration of Compliance" as a code of conduct based on the consensus of its officers and employees.
Based on these codes of conduct, the Company conducts regular and continuous compliance training for all officers and employees and manages goals on an individual basis in accordance with the codes of conduct. In addition, in order to pursue the optimal profit for Customers, the Company encourages its employees to obtain professional qualifications, etc., and focus on creating a better and more comfortable work environment to motivate and enable them to work efficiently and creatively.

• ESCON REIT has not published an English version of reports related to the management system, etc.